What are tax brackets? A 2023 guide

Trying to figure out which tax bracket you fall into? Filing a tax return can seem like a complicated process. But knowing how certain factors—like your filing status or deductions—affect your tax bracket might help you make sense of your tax bill. 

Read on to learn what tax brackets are and how to find the correct one. 

Key takeaways

• The U.S. has a progressive tax system with seven federal income tax brackets.
• As a taxpayer earns more money, they may move into a higher income tax bracket.
• Examples of taxable income include wages, tips, salaries, bonuses and more. 

A tax bracket represents a range of incomes that will be taxed at a specific rate. These brackets could help taxpayers estimate how much they’ll pay in taxes each year. 

The U.S. has a progressive tax system with seven federal tax brackets. In this system, the tax rate increases as a taxpayer’s income increases. 

Taxable income and filing status may determine a person’s tax bracket. And if they’re eligible for deductions or exemptions, these factors could affect their taxable income and, in turn, their tax bracket.

What is a filing status?

The IRS uses a taxpayer’s filing status to determine their filing requirements, standard deduction, tax-credit eligibility and more. 

There are five different filing statuses:

• Single
• Married filing jointly
• Married filing separately
• Head of household
• Qualifying widow—or widower—with dependent child

A person could have more than one filing status, or their status could change during the tax year. If you don’t know which status to select, taking the IRS filing status quiz could help you find the right option. You could also work with a professional tax adviser for more guidance.

Once you know your filing status and your taxable income, you can find the tax bracket that fits your situation.  

Here’s a breakdown of the 2022 federal tax brackets for single taxpayers:

• 10%: Incomes between $0 and $10,275
• 12%: Incomes between $10,276 and $41,775
• 22%: Incomes between $41,776 and $89,075
• 24%: Incomes between $89,076 and $170,050
• 32%: Incomes between $170,051 and $215,950
• 35%: Incomes between $215,951 and $539,900
• 37%: Incomes of $539,901 or more

Those who qualify as the head of household may have a larger standard deduction. So they could have different tax brackets:

• 10%: Incomes between $0 and $14,650
• 12%: Incomes between $14,651 and $55,900
• 22%: Incomes between $55,901 and $89,050
• 24%: Incomes between $89,051 and $170,050
• 32%: Incomes between $170,051 and $215,950
• 35%: Incomes between $215,951 and $539,900
• 37%: Incomes of $539,901 or more

Tax brackets are updated regularly to account for economic factors like inflation. So you may have a different tax bracket—and a different tax rate—from one year to the next. 

Tax brackets are typically adjusted upward due to cost-of-living increases. For example, the 2023 single-filer tax brackets will be:

• 10%: Incomes between $0 and $11,000
• 12%: Incomes between $11,001 and $44,725
• 22%: Incomes between $44,726 and $95,375
• 24%: Incomes between $95,376 and $182,100
• 32%: Incomes between $182,101 and $231,250
• 35%: Incomes between $231,251 and $578,125
• 37%: Incomes of $578,126 or more

To find your tax bracket, you’ll need to have an estimate of your annual salary or earnings. You’ll also need to know your filing status.

Tax bracket example

Taxpayers typically have more than one tax bracket. For example, a single taxpayer who made $58,000 in 2022 would be in the bracket with a 22% tax rate. But their entire income wouldn’t be taxed at this rate. 

They might pay a 10% tax rate on the first $10,275 they earn in 2022. And they would pay a 12% tax rate on additional income until they earn $41,775. Earnings between $41,776 and their max salary of $58,000 would be taxed at the 22% rate.

If you want to find the actual amount you’ll pay in taxes, you need to know the difference between your marginal tax rate and your effective tax rate.

Marginal tax rate vs. effective tax rate

Taxpayers can use their marginal tax rate and their effective tax rate to determine how much they’ll owe the IRS. But what’s the difference between the two?

• Marginal tax rate: The marginal tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Each of these rates relates to a specific income tax bracket. The bracket that a taxpayer’s highest portion of income falls into is their tax bracket. That bracket’s tax rate will be their marginal tax rate.  
• Effective tax rate: Income is taxed in tiers, so a person’s entire income isn’t typically taxed at the marginal tax rate. To find the amount of money taxpayers actually owe the IRS, they need to find their effective—or average—tax rate.

Marginal tax rates only apply to the highest portion of income. But if you want to find how much money you’ll actually owe the IRS, you need to find your effective tax rate. 

First, divide your income tax expenses by your before-tax income. Then multiply this number by 100 to find your effective tax rate. 

Just keep in mind that your deductions and taxable income can both affect this rate. 

Effective tax rate example

Using the same information as above, let’s assume your gross income for 2022 was $58,000 and you paid $10,000 in taxes. Your marginal tax rate would be 22%. To find your effective tax rate, you would divide $10,000 by your total income of $58,000. You would then multiply that number by 100 for an effective tax rate of 17%. 

Standard deductions and itemized deductions are two ways taxpayers might be able to lower their taxable income. By reducing their taxable income, they could drop to a lower tax bracket. 

The IRS determines the dollar amount for standard deductions. And a taxpayer’s filing status could determine which standard deduction they receive. 

Some taxpayers may have more tax write-offs than those offered with the standard deduction. If that happens, they may choose to itemize their deductions. But keep in mind that itemized deductions may require detailed recordkeeping to reduce the risk of a tax audit. 

Examples of tax deductions include:

• Retirement plan contributions
• Charitable donations
• Mortgage interest
• Medical expenses
• Property tax
• HSA contributions

Tax credits 

Some taxpayers qualify for tax credits, which may directly reduce their tax bill. Examples of tax credits include:

• Earned income tax credit
• Savers tax credit
• Child tax credit

Not sure which deductions or credits you qualify for? Working with a professional tax adviser could help. They could also help you determine if standard or itemized deductions are better for your situation. 

Tax brackets can show taxpayers the tax rate they’ll pay on different tiers of their income. The U.S. has a progressive tax system with seven federal income tax brackets. So as you earn more income, you may move into a higher tax bracket. 

Your marginal tax rate applies to your highest portion of income. But your effective tax rate is the actual amount you’ll owe the IRS. 

You might be able to reduce your taxable income and lower your tax bracket with things like retirement savings or HSA contributions. It may be helpful to see if you qualify for tax credits too. 

Need some guidance this tax season? Learn more about how to file taxes and when to expect your refund.